National median mortgage payment fell in October, with affordability gains extending across demographic groups
Homebuyer affordability improved across the board in October, with the national median mortgage payment declining to $2,039 from $2,067 the prior month, according to the Mortgage Bankers Association's Purchase Applications Payment Index.
The decline marks the fifth consecutive month of affordability gains, driven by a combination of moderating mortgage rates, wage growth, and a slowdown in home-price appreciation.
The median payment dropped $88 year-over-year, representing a 4.2% decrease.
"PAPI is at its lowest level since March 2022 and is likely to continue to improve as mortgage rates hold to around 6 percent and more supply comes onto the market," said Edward Seiler, associate vice president of housing economics at the MBA.
The MBA's PAPI, which measures mortgage payment-to-income ratios using actual application data from the Weekly Applications Survey, fell to 152.0 in October from 155.0 in September. Payments decreased 4.2% while earnings growth pushed the annual decline in PAPI to 5.5%.
Borrowers at the lower end of the spectrum also saw relief. Those applying for lower-payment mortgages saw their median payment decline to $1,402 from $1,418 the previous month.
Affordability gains span borrower types and regions
FHA applicants saw median payments drop to $1,789 in October from $1,792 in September.
Conventional borrowers experienced a steeper decline, with median payments falling to $2,063 from $2,105 in September. Both segments remain well below year-ago levels.
Affordability improvements extended across demographic groups. Black households experienced a PAPI decline from 154.4 to 151.5, while Hispanic households saw their index fall from 144.3 to 141.6. White households' PAPI decreased from 156.0 to 153.1.
Regionally, affordability remains most strained in Idaho (238.0), Nevada (230.7), and Rhode Island (199.4), while Louisiana (113.5), Connecticut (116.2), and D.C. (118.6) offered the most favorable payment-to-income ratios.
The path forward
With mortgage rates stabilizing near 6% and housing inventory expected to increase, industry observers anticipate affordability pressure will continue to ease for qualified borrowers entering the market.
The data suggests the worst of the affordability crisis may have passed, though challenges remain for first-time buyers in high-cost markets.
Meanwhile, after nearly a year of slowing growth, US house prices saw a modest acceleration in October, according to the latest First American Data & Analytics House Price Index (HPI) report.
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